Casual dining, QSR sales performance gap widens

Restaurant industry same-store sales results remained positive in July, although lower when compared with June, as the quick-service segments’ strength overcame negative trends at casual-dining brands, according to the latest NRN-MillerPulse survey.

Overall industry same-store sales rose 1.3-percent in July, a result just below the 1.8-percent increased reported in June, the survey found. Quick-service restaurants, which include both fast-food and fast-casual brands, posted same-store sales gains of 2.6 percent for the month. Full-service restaurants, which include both casual-dining and fine-dining brands, continued to underperform with a 0.3-percent decline in same-store sales in July. More specifically, the gap between fast-food and casual-dining restaurants continued to expand in July.

“The performance gap between fast food and casual dining was rather dramatic in July,” said Larry Miller, founder and chief executive of MillerPulse and a former Wall Street securities analyst. “The gap was 4.6 percentage points, or twice that of the average gap over the past two years and the fourth widest gap over that period.”

MillerPulse, an exclusive partner with Nation’s Restaurant News, is a leading provider of industry performance data. The data and future business outlooks contained within are derived from its operator base that averages over $40 billion in restaurant industry sales and covers all regions of the country. The survey group represents operations within the quick-service, casual-dining, fine-dining and fast-casual segments. The 57 operations surveyed in August regarding July sales, profit trends, performance and outlook represent brands booking $59.8 billion in industry sales.

In July, same-store sales at casual-dining restaurants fell 1.6-percent, worse than the 0.1-percent decline in June. It was the 25th consecutive month that the segment underperformed the industry as a whole. Guest traffic at casual-dining restaurants was also fell 2.2-percent for the month, the survey found. Conversely, fast-food restaurants reported a 2.6-percent and 1.8-percent increase in July sales and traffic, respectively.

“The question is why,” Miller asked. “There was notable weakness in alcohol sales and the dinner daypart, which may suggest consumers are still spending frugally and fast food's improved total value offering is resonating better.”

Operators also attributed struggling July sales to the Fourth of July holiday falling on a Thursday and unfavorable weather, which included above average rainfall in the South and extreme heat in the Northeast. Miller noted that moderation in average check and erosion in the lunch, morning and weekday dayparts also contributed to disappointing July sales figures.

Looking ahead, however, operators believe that things will get better. Operators surveyed across all segments believed that sales would improve in August, as well as over the next six months, MillerPulse found. The optimism did not go unfounded as sales improved during the first week of August, driven by a 2.4-percent increase from fast-food restaurants. Consumer confidence also hit its highest level since July of 2007, the survey found.

“Year to date, same-store sales are up 1.1 percent and up 4.5 percent on a two-year basis,” he said. “If this two-year trend holds, sales would be up a rather lackluster 1.6 percent, but would be stronger for the remaining five months of the year, up 2.3 percent.”

Restaurant chains and operators looking to participate in the MillerPulse survey for additional results and insights can register at millerpulse.com.